AGLD.V · 2017-07-11 12:00:00

Austral Gold Files Technical Report Supporting Robust Pre-Feasibility Study Results for Combined Guanaco Mine and Amancaya Project, Chile

Technical Reports (NI 43-101) Economic Studies

Austral Gold Files Technical Report Supporting Robust

Pre-Feasibility Study Results for Combined Guanaco

Mine and Amancaya Project, Chile

Vancouver, British Columbia--(Newsfile Corp. - July 11, 2017) -

Austral Gold Limited

(ASX: AGD) (TSXV: AGLD) ("Austral" or

the "Company") is pleased to announce the filing on SEDAR and the ASX of a Technical Report, prepared in accordance with

National Instrument 43-101 and JORC Code, on the Guanaco and Amancaya Gold Project, Region II, Chile, dated 16 June,

2017, with an effective date of 31

December 2016 (the

"Technical Report"

). The Technical Report supports the Company's

pre-feasibility study, disclosed in the Company's announcement dated 9 June 2017.

Highlights of the Technical Report;

After-Tax Net Present Value

(NPV):

$US7

at a 5.0% discount rate*

Mine life of 5 years,

based on Mineral Reserves

Metal prices: based on a ramp-up from current prices to reserve prices of $US1,300/oz gold and $US20/oz silver, based

on consensus of independent forecasts

All-In Sustaining Cost ("AISC") of $US892/oz gold

Combined

average annual production of approximately

53,000 ozs

gold

, 370,000 ozs

silver

Metallurgical recovery

estimated to average

92% for gold, 80% for silver for the new processing plant

Average operating cost over the mine life is

111

per tonne milled.

Life of Mine ("

LOM

) sustaining capital costs total

66.4 million

, including reclamation and closure.

No additional CAPEX requirements for operation are envisaged, as all infrastructure plant and equipment has been fully

funded as of end of December, 2016.

*Due to an adjustment to the capital cost estimate, economic results differ slightly from the Company's previous News Release

on June 9, 2017.

Stabro Kasaneva, CEO of Austral Gold stated: "This is a significant step for Austral Gold in executing on its focus on high-

margin production growth. Once the new processing plant enters operation the Company plans to transport the high grade

Amancaya production, currently being stockpiled at Amancaya, to the new plant. We hope to see the efficiencies of the new

plant positively impact our cash flow, with gold recoveries expected to improve by at least 25%. We hope to complete final

commissioning of the new plant shortly and commence combined operations thereafter."

SUMMARY OF RESERVE AND RESOURCE ESTIMATES

Table 1: Amancaya and Guanaco Mineral Reserves - as at December 31, 2016

Austral Gold Ltd. - Guanaco and Amancaya Gold Project

Area

Category

Tonnes

(kt)

Grades (g/t)

Ounces (koz)

AuEq

Amancaya

Open Pit

Indicated

171.5

11.24

177.5

13.6

62.0

978.9

75.1

Inferred

59.7

7.57

110.0

9.0

15.0

210.0

20.0

Underground

Indicated

633.2

9.21

54.5

9.9

187.4

1,109.5

202.3

Inferred

900

6.7

31.4

7.2

195

910

210

Total

Indicated

804.7

9.64

80.7

10.7

249.4

2,088.4

277.4

Inferred

960

6.8

7.3

210

1,110

220

Guanaco

Underground

Measured

641.0

3.02

12.9

3.2

62.0

266.0

65.8

Indicated

1552.0

2.86

13.0

3.0

143.0

650.0

151.0

Inferred

1200

2.6

2.8

100

500

110

Combined

All

Measured

641.0

3.02

12.9

3.2

62.0

266.0

65.8

Indicated

2,356.7

5.17

36.1

5.7

392.4

2,738.4

428.4

Total M+I

2,997.7

4.71

31.2

5.1

454.4

3,004.4

494.2

Inferred

2,150

4.5

4.7

310

1,600

330

Notes: Amancaya Resource

1. Mineral Resources followed CIM definitions, 2014 and are compliant with the JORC Code.

2. Mineral Resources are reported inclusive of Mineral Reserves.

3. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

4. Open pit Mineral Resources are reported at a cut-off grade of 1.5 g/t AuEq. Pit optimization shells were used to constrain the

resources. Underground Mineral Resources are estimated at a cut-off grade of 2.5 g/t AuEq beneath the open pit shells.

5. Mineral Resources are estimated using a long-term gold price of US$1,300 per ounce, and a silver price of US$20 per

ounce.

6. Gold Equivalents (AuEq) were calculated as AuEq = Au + 0.0134 x Ag, based on a gold and silver price of $1,300/oz and

$20/oz and recoveries of gold and silver of 92% and 80%, respectively.

7. Minimum width for the open pit resource is 1.0 m and 1.5 m for the underground resource.

8. Bulk density is 2.50 t/m

9. Numbers may not add due to rounding.

Notes: Guanaco Resource

1. Mineral Resources followed CIM definitions, 2014 and are compliant with the JORC Code.

2. Mineral Resources are reported inclusive of Mineral Reserves and do not include dilution.

3. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

4. Mineral Resources are reported at a 1.5 g/t AuEq cut-off grade where AuEq = Au + (0.0134 * Ag).

5. Mineral Resources are estimated using a long-term gold price of US$1,300 per ounce, and a silver price of US$20 per

ounce.

6. Gold Equivalents (AuEq) were calculated as AuEq = Au + 0.0134 x Ag, based on a Au and Ag price of $1,300/oz and $20/oz

and recoveries of Au and Ag of 92% and 80%, respectively.

7. A minimum mining width of 1.5 m was not used for the estimation of the Mineral Resource.

8. Bulk density is 2.50 t/m

9. Numbers may not add due to rounding.

The conversion of the Indicated Resources into Mineral Reserves for Amancaya is approximately 84%, reflecting the high-grade

nature of the deposit. Inferred Resources are not included in the Mineral Reserve estimate or the economic analysis.

BACKGROUND

The Guanaco Gold Project is currently held by Austral Gold through its wholly-owned subsidiary Guanaco Mining Company Ltd

(GMC).

GMC has a 99.99% interest in Guanaco Compañía (Cía.) Minera SpA (GCM), the subsidiary entity in Chile that owns

and currently operates the Guanaco Mine.

The Guanaco Gold Project has produced approximately 50,000 oz of gold per year

for the last four years and is projected to continue at this rate for the next five years, as described in the LOM plan. Following

purchase of the Amancaya project from Yamana Gold in 2014 and an infill drilling program in 2016 the Company has been

assessing the possibility to run both Guanaco and Amancaya as a combined operation, with all production treated at a new

processing plant built at Guanaco. RPA was commissioned to undertake the Technical Report used by the Company to

undertake a Pre-Feasibility Study.

MINING METHODOLOGY

The mining methodology used at Guanaco consists of sub-level open stoping (SLOS) and mining is carried out by following the

veins with drifts on two levels, separated by 16 m (20 m floor to floor).

The main production at Guanaco comes from the

Cachinalito West vein, with additional production coming from the Dumbo and Perseverancia veins.

Stopes are designed at a minimum mining thickness of 1.5 m with planned dilution of 0.5 m on either side resulting in final stope

widths of 2.5 m.

Drifts are designed at 3.5 m with 0.25 m of dilution on either side resulting in a final width of 4 m.

Sill pillars of

four metres in height are left every 40 m (vertical) and ten metre wide rib pillars are left every 70 m (horizontal).

The Amancaya deposit consists of mainly northwest and southeast veins, with dip direction of 70° to 85°.

The country rock

comprises highly competent dacite-andesite.

The open pit mine at Amancaya will be carried out as a conventional operation using 30 t trucks and a combination of

excavators and front-end loaders.

Waste and ore will be blasted and mined separately using a "trenching" method to reduce the

amount of dilution.

The SLOS mining methods planned at Amancaya are similar to those used at the Guanaco Mine.

The Amancaya orebody is

generally thinner than Guanaco resulting in the use of split-blasting to minimize dilution during drift development.

Split blasting

involves the separate blasting of ore and waste in the drift face.

Vertical crater retreat (VCR) mining will be used to connect the upper and lower drifts and create an open face for longhole

blasting.

Ore from Amancaya will be hauled by contractor via a 75 km road to the new mill located at the Guanaco mining complex.

The underground operations at Guanaco and Amancaya are designed to produce approximately 1,000 tpd and 800 tpd,

respectively.

The open pit at Amancaya is expected to produce 400 tpd.

Each operation will overlap to produce an average mill

feed of approximately 1,000 tpd during peak production in 2017 and 2018.

MINERAL PROCESSING

The Company restarted leach pad stacking in September 2010 and the first gold bar was poured in December 2010. With the

acquisition and start of mining at Amancaya, commissioning of a 1,500 tpd agitated leach milling circuit commenced in March

2017, and is expected to be fully operational by July 2017.

The capacity of the mill was selected to allow for potential increases

in production.

The new plant is integrated into the existing operation in order to minimize construction and capital costs as much

as possible.

The existing crushing operation will be utilized to prepare feed for the milling circuit.

The existing Merrill-Crowe

circuit was refurbished to accommodate ore with higher silver concentrations from Amancaya and the zinc precipitate that is

produced in the Merrill-Crowe circuit will be processed in the existing refinery.

The Company plans to direct all ore to the milling circuit and stop heap leaching as soon as the plant is operational.

Ore that is

already stacked on the leach pad will continue leaching as long as it is economic to do so.

At the end of leaching, the ore will be

rinsed with water to remove residual cyanide that is entrained in the leach pad.

The processing circuits include:

Three stage crushing circuit

Reversing conveyor to feed either the heap leach operation or the milling circuit

Covered stockpile

Single stage ball milling circuit operated in closed circuit with hydro-cyclones

Pre-leach thickener

Three-stage agitated leach circuit

Three-stage counter-current-decantation (CCD) wash circuit

Filter feed tank and plate and frame pressure filters to recover solution and produce filtered tailings

Loading of the tailings with a front end loader and truck haulage to dry tailings deposit

Dry tailings deposit

Refurbished Merrill-Crowe circuit for precious metal recovery including:

Clarifying filters

De-aeration tower

Zinc cementation (i.e., precipitation)

Precipitate filters

From the covered stockpile, two vibrating feeders are used to remove ore from the bottom of the stockpile and feed it to a series

of conveyors that are used to feed the ball mill.

ENVIRONMENTAL, PERMITTING AND SOCIAL CONSIDERATIONS

Environmental Impact Statements ("DIAs") have been approved for the Guanaco and Amancaya Projects, including:

The Guanaco operation that was permitted by Amax

Reopening of the Guanaco operation by Austral Gold

Opening of the Amancaya Mine

Installing the 33 kV Electrical Transmission Line

In addition to the DIAs, environmental studies and numerous environmental permits have been issued to support mining at

Guanaco and Amancaya, as outlined in Section 20 of the Technical Report.

Due to the remote location, Guanaco and Amancaya do not have a large impact on local residents, which are generally

supportive of mining operations. Environmental studies and environmental permits have been issued to support mining at

Guanaco and Amancaya.

CAPITAL AND OPERATING COST ESTIMATES

The estimated sustaining capital costs for Amancaya and Guanaco from December 31, 2016 forward are summarized in Table

Since the capital costs for the new mill were incurred in 2016, all costs from 2017 forward are treated as sustaining capital

costs. The Company expects to be able fund these from operations. This, however, remains uncertain and the Company will

assess any funding needs on a needs basis.

TABLE 3:

SUMMARY OF CAPITAL COSTS

Austral Gold Limited — Guanaco and Amancaya Mines

Sustaining Capital Cost

Unit

Value

Amancaya Mine Development

US$ '000

20,869

Guanaco Mine Development

US$ '000

3,029

General Sustaining UG Capex

US$ '000

4,020

Equipment Lease Payments

US$ '000

18,999

Processing

US$ '000

2,081

Exploration

US$ '000

9,000

Other

US$ '000

552

Reclamation and closure

US$ '000

7,876

Total Capital Cost

US$ '000

66,426

Unit operating costs for the LOM plan are shown in Table 4.

The average operating cost over the life of mine is estimated at

US$111 per tonne milled.

TABLE 4: SUMMARY OF LOM UNIT OPERATING COSTS

Austral Gold Limited — Guanaco and Amancaya Mines

Area

Unit

Value

Mining (Amancaya Open Pit)

US$/t moved

4.10

Mining (Amancaya Open Pit)

US$/t milled

58.35

Mining (Amancaya Underground)

US$/t mined

40.30

Mining (Guanaco Underground)

US$/t mined

47.56

Processing (Mill)

US$/t milled

35.14

Processing (Heap Leach)

US$/t milled

20.00

Area

Unit

Value

Mining (Average)

US$/t milled

44.99

Haul (Amancaya to Guanaco)

US$/t milled

8.60

Processing (Average)

US$/t milled

31.66

G&A

US$/t milled

25.77

Total Unit Operating Cost

US$/t milled

111.01

The total operating cost over the life of mine is estimated at US$160 million.

CASH FLOW ANALYSIS

Considering Guanaco and Amancaya on a stand-alone basis, the undiscounted pre-tax cash flow totals $93 million over the

current mine life.

After-Tax Net Present Values (NPV) at various discount rates are:

5% discount rate is $71.3 million.

7.5% discount rate is $66.1 million.

10% discount rate is $61.4 million.

QUALIFIED PERSONS

The Technical Report on the Guanaco and Amancaya Gold Project, Region ii, Chile was prepared in accordance with CIM

definitions

2014 in National Instrument 43-101 and JORC Code, 2012. The Technical Report has been filed under the

company's profile on SEDAR and the ASX. The RPA Qualified Persons (QPs) for the Guanaco and Amancaya

Technical

Report include:

Kathleen Ann Altman, P.E., Ph.D. (Metallurgy)

Jason J. Cox, P.Eng. (Mineral Reserves)

Ian Weir, P.Eng. (Mineral Reserves)

Chester M. Moore, P.Eng., (Mineral Resources)

This press release has been reviewed and approved by the RPA Qualified Persons.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX

Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

About Austral Gold

Austral Gold Limited is a growing precious metals mining, development and exploration company building a portfolio of

quality assets in Chile and Argentina. The Company's flagship Guanaco project in Chile is a low-cost gold and silver

producing mine with further exploration upside.

Austral commenced open-pit mining operations at Amancaya in 2017.

Amancaya is 75km from the Guanaco processing plant, where the Company intends to transport production. A PFS

completed in mid-2017 showed robust financial performance is expected from operating both operations as a combined

operation, with five years of mine life from reserves.

The Company

also

owns 70% and is

operator of the underground silver-

gold Casposo mine in San Juan, Argentina. With an experienced local technical team and highly regarded major

shareholder, Austral's goal is to continue to strengthen its asset base through acquisition and

discovery. Austral Gold Limited

is listed on the TSX Venture Exchange (TSXV: AGLD), and the Australian Securities Exchange (ASX: AGD). For more

information, please consult the company's website

www.australgold.com

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX

Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

On behalf of Austral Gold Limited:

"Stabro Kasaneva"

CEO

For Further Information Please Contact:

Mike Brown, VP Corporate Development

[email protected]

Canada: +1 604 568 2496

Australia: + 61 2 9380 7233

South America: + 54 11 4323 7558

Forward Looking Statements

Statements in this news release that are not historical facts are forward-looking statements.

Forward-looking statements are

statements that are not historical, and consist primarily of projections - statements regarding future plans, expectations and

developments.

Words such as "expects", "intends", "plans", "may", "could", "potential", "should", "anticipates", "likely",

"believes" and words of similar import tend to identify forward-looking statements.

Forward-looking statements in this news

release include the Company's plan to transport the high grade Amancaya production currently being stockpiled at Amancaya to

its new plant; its expectation that the new plant will be operational shortly and its plans to direct all ore to the milling circuit and

stop heap leaching as soon as the plant is in operation; the expectation that efficiencies of the new plant will positively impact

cash flows and improve gold recoveries; and those concerning cost and performance projections, including the LOM plan

production. All of these forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other

factors that could cause actual events or results to differ from those expressed or implied, including, without limitation, business

integration risks; uncertainty of production, development plans and cost estimates, metallurgical recoveries, commodity price

fluctuations; political or economic instability and regulatory changes; currency fluctuations, the state of the capital markets,

uncertainty in the measurement of mineral reserves and resource estimates, Austral's ability to attract and retain qualified

personnel and management, potential labour unrest, reclamation and closure requirements for mineral properties; unpredictable

risks and hazards related to the development and operation of a mine or mineral property that are beyond the Company's

control, the availability of capital to fund all of the Company's projects and other risks and uncertainties identified under the

heading "Risk Factors" in the Company's continuous disclosure documents filed on SEDAR.

You are cautioned that the

foregoing list is not exhaustive of all factors and assumptions which may have been used. Austral cannot assure you that actual

events, performance or results will be consistent with these forward-looking statements, and management's assumptions may

prove to be incorrect. Austral's forward-looking statements reflect current expectations regarding future events and operating

performance and speak only as of the date hereof and Austral does not assume any obligation to update forward-looking

statements if circumstances or management's beliefs, expectations or opinions should change other than as required by

applicable law. For the reasons set forth above, you should not place undue reliance on forward-looking statements.

ted

ABN 30 075 860 472 (

ASX

GD)

Suite 203, 80 William St, Sydney NSW 2011 | T +61 2 9380 7233 | F +61 2 8354 0992 |

[email protected]

www.australgold.com.au

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